Polish GDP falls 2.8% y/y in Q4, flash estimate shows

Polish GDP falls 2.8% y/y in Q4, flash estimate shows
By Wojciech Kosc in Warsaw February 15, 2021

Polish GDP fell a seasonally adjusted 2.8% y/y in the fourth quarter after retreating 1.8% y/y in July-September, a flash estimate released by the Central Statistical Office (GUS) on February 12 showed.

The reading shows Poland’s economy taking a dip again after recovering in the third quarter after the shock of the spring COVID-19 (coronavirus) lockdown. A recovery is expected from the first quarter but its pace will largely depend on how fast the Polish government rolls out its vaccination programme to the vulnerable. That, in turn, will dictate the schedule of easing the pandemic restrictions.

In unadjusted terms, Poland’s GDP also contracted 2.8% y/y in Q4 versus a fall of 1.5% y/y the preceding quarter, GUS data also showed. In quarterly terms, economic growth declined an unadjusted 0.7% in July-August after jumping 7.9% q/q in the third quarter.

In 2020, Poland's GDP declined 2.8% in one of the world's mildest coronavirus-driven recessions.

GUS did not provide the GDP structure in its flash estimate but analysts see some trends in high frequency data.

“Monthly activity data show that the contraction in construction eased and industrial production growth accelerated. Weakness was concentrated in the retail sector and it seems that containment measures hit services activity harder than in many other European countries where GDP expanded last quarter,” Capital Economics said.

The outlook for the first quarter and the rest of the year is moderately optimistic.

“The pandemic rollercoaster is most likely over and quarterly growth profile should normalize in 2021,” Poland’s large bank, the state-controlled PKO BP said.

“Activity should pick up in Q1. The government is trailing a two-week relaxation of restrictions in some hospitality and leisure sectors and the gradual reopening of schools may follow,” Capital Economics said.

“The pace of the recovery from Q2 will hinge on the vaccination programme … Poland has administered a first dose of a vaccine to 5% of its population, which is more than in most EU countries. But at this rate it will take months for the government to vaccinate its large vulnerable population and this may delay the widespread easing of restrictions from Q2,” it added.

“We expect GDP growth to rebound this year [but] we remain cautious and stick to our full-year GDP growth forecast of 3.1%,” Erste wrote. 

“Prolongation of lockdown measures into January 2021 in Poland and further into Q1 in some EU countries especially in Germany will in our view weigh on the recovery. We expect a more visible rebound to start only from 2Q21 onwards,” it added.

“We expect GDP to expand by 4.8% in 2021, but there is a growing risk that the recovery is pushed later into the year,” Capital Economics noted.

A detailed breakdown of the flash reading – together with a possible revision of the data – is scheduled for publication on February 26.